Fruity-Juicy Restaurant - Market Needs - Example

Fruity-Juicy Restaurant-Business Plan Student’s Name Institutional Affiliation Course Name Date of Submission Executive Summary Fruity-Juicy Restaurant is a family-owned start-up business formed by Mr. and Mrs. Brown both of whom have a wealth of experience in the food industry. Because most consumers are increasingly becoming health conscious, the two entrepreneurs have decided to start a fruit and smoothie business that will be located along Oxford Street, Sidney. The restaurant will offer different types of fruits taken directly from the firm. The smoothies will also be made of fresh milk from farms with no additives, flavors or sweeteners added to the fruit juices and smoothies. Because the owner expect to face stiff competition from other players in the industry, the business intend to gain competitive advantage by differentiating itself from rivals. The restaurant will focus mainly on satisfying its customers through the provision of quality products and services. The start-up capital to be used will partly come from the owners who will contribute 50% while the rest will be sourced through equity and debt financing. However, based on the financials, it becomes clear that the business will be profitable as it will break even in the second month of operation. As such, the owners are quite confident that the business will succeed despite stiff competition expected in the industry. Table of Contents Executive Summary 2 Table of Contents 3 Company Background and History 4 Products and Processes 4 Technology and Intellectual Property 5 Market Needs 5 Marketing Strategy 8 Operational Plans 10 Financials 12 Break Even Analysis 15 Management and Key Personnel 16 Company Background and History Fruity-Juicy is family-owned start-up business that has been formed by Mr. and Mrs. Brown both of whom have worked for popular restaurants, such as the McDonalds for more than two decades. As such, the two understand what it takes to start and run a successful business. Having understood the dynamics and the needs of most consumers in their previous jobs, the two have decided to start up a fresh fruit and smoothie restaurant. Their resolve to start up a fresh fruit and juice business has been informed by the changing lifestyle of consumers who are currently more health conscious and prefer to eat healthily. The restaurant will be located along the busy Oxford Street in Sidney, where the business owners intend to lease a spacious building. Products and Processes Fruity-Juicy Restaurant will offer Sidney city restaurants with fresh fruits and juices taken directly from the farms. To cater for the tastes of all our diverse customers, the restaurant will serve variety of fruit juices, including apple, oranges, mangoes, and pineapple, avocado, guavas, pawpaw, and water melons. Other fruits that will be served in the restaurant include bananas, grapes, plums, blackberry, cranberry and peach. Our fruits will act as a direct alternative to the fast foods in the sense that the fruits that we intend to serve our customers will be taken directly from the farms and served fresh. This implies that the fruits will be 100% natural ingredients and will not have any form of additive or sweeteners. The Fruity-Juicy Restaurant will also serve smoothies, such as yogurt, and fresh milk. The fresh fruits will be blended and mixed based on customers’ selection. This implies that customers who visit the Fruity-Juicy Restaurant will be given the opportunity to select the type of fruit that they intend to consume, which will immediately be blended and served to the customers. The fruits juices and smoothies will be sold at a price of £1 per cup. Technology and Intellectual Property Businesses compete largely based on technology today. Accordingly, the business will involve the use of blending machine for blending the fruits. The use of blending machine will be appropriate because it will ensure that good quality juice is produced within a short time. Similarly, the smoothies, such as yogurt will be made using electric machines. However, for purposes of protecting the business name, we will register the business with intellectual property. Market Needs Australia’s fruit market is among the fastest growing in the world. Unlike in the past where most Australians avoided eating fruits, presently, the demand for fruits has increased fivefold over the past five years. In fact, industry analysts predict that the revenue from the Australian fruit market could increase b about 0.9% in 2014/2015 to reach $3.8 billion (IBIS World 2015). The growth in revenue is expected because of the increase due to the increase in demand and disposable income among Australians. Market analysts have predicted the fruit market to continue growing in the future as Australian consumers are increasingly becoming more health conscious. For many years now, many Australians have been eating mainly junk foods from popular restaurants, such as the McDonalds. However, eating too much of junk foods have been linked to the rising cases of chronic health conditions. For instance, a recent research found that about 60% of Australian adults are either overweight or obese, with more than 25% being classified as obese (IBIS World 2015). The rising obesity prevalence in Australia has also been associated with increasing cases of other chronic illnesses, such as hypertension, diabetes, and heart problems. Unfortunately, the increased cases of these diseases have been linked to the increased consumption of fast foods that contain high calorie and salt contents. Because of the increased health awareness among Australians, most Australian households are currently avoiding eating junk foods in favor of healthy foods, such as fruits. As such, Fruity-Juicy restaurant intends to take advantage of the increasing demand for fruits by setting up a fresh fruit juice restaurant to cater for the needs of the health conscious Australian consumers that will be the main target of the restaurant. This is because these consumers are willing to spend their money on healthy foods. Accordingly, the restaurant will provide these targeted Australian consumers with healthy fruit juices and smoothies taken directly from the farm. We intend to serve the fruit juices as natural as possible, but ensuring that no additives, sweeteners or coloration are added to the fruits to help differentiate us from our competitors. We strongly believe that the restaurant will attract a huge number of customers because of the health benefits associated with the fruit juices and smoothies that we intend to serve. Some of the health benefits that our customers will derive from the consumption of our fresh fruits and smoothies include boosted immune system reduce the risk of developing heart attack, stroke, diabetes, and certain cancers. Additionally, Australian consumers will find it healthy to eat in our restaurant because the fruits and smoothies that will be served in the restaurant will help make consumers develop healthy gums, skin and strong bones. In fact, a recent study conducted in Australia found that more than 90% prefer eating healthy foods, such as fresh fruits to junk foods (IBIS World 2015). This trend has seen spending on healthy foods, such as fresh fruits and smoothies increase significantly in the past five years. Additionally, analysis of the Australian market indicates that the majority of Australians enjoys eating out in bars and restaurants. IBIS World (2015) report shows that an average Australian eat out at least four times a month and spends an average of $70 every week at restaurants, cafes and take away shops. Most Aussies like eating out mainly because of the convenience, busy schedules and because of the changing lifestyle as most Australians women spend much of their time at work and lack the time to prepare food for the family. This trend of eating out in Australia presents excellent business opportunity for Fruity-Juicy Restaurant that intends to start a fruit and smoothie restaurant in Sidney City. Despite the excellent business opportunity presented to Fruity-Juicy Restaurant in Sidney, the restaurant will have to overcome strong competition that exists in the industry. Some of the major players in the Australian fruit and smoothie business include Boost Juice Bars, Emma & Tom's, Tropicana, and Kick Juice Bars (IBIS World 2015). Additionally, Fruity-Juicy Restaurant will also have to brace from stiff competition from popular fast-food restaurants, such as the McDonalds that has been introducing fruits and smoothies into its menu to attract health conscious consumers. Other than the fruit and smoothie bars and restaurants, Fruity-Juicy will also have to brace for competition from groceries and supermarkets that offer Australian consumers alternative fruit market. Currently, there are numerous groceries and supermarkets that also sell farm fresh juices and smoothies that are a direct substitute to the products that Fruity-Juicy will offer to its customers. However, Fruity-Juicy intends to beat the competitors by differentiating its products from those of the competitors. Marketing Strategy Marketing is a critical activity that any business that intends to succeed must engage. Marketing involves understanding the needs of consumers in a market and offering products and services that meets those needs. The management of Fruity-Juicy understands the importance of marketing and intends to adopt strong and effective marketing strategies to enable it establish a position in the Australian fruits and smoothie business. Accordingly, Fruity-Juicy marketing strategy will be based on serving its targeted customers well by offering high quality products and services. The management of the restaurant intends to open its first restaurant along the busy Oxford Street in Sidney as a market tester. This first outlet will be used as a model for expanding the business by opening up additional restaurants in other parts of the country. Fruity-Juicy will focus mainly on the provision of high quality fruits and smoothies, as well as establishing a strong brand image in the Australian local market. Because there are a number of fruit and smoothie businesses with other still entering the Australian market, the best way to win consumers is to ensure that customers are satisfied all the time. As such, we intend to maintain high level of customer satisfaction by providing high quality fruits and smoothies to help build customer loyalty. In particular, the restaurant will focus on serving customer fresh fruits taken directly from the firms. Because we are targeting health conscious customers, Fruity-Juicy will ensure that its fruits and smoothies are served in their natural forms, without adding any flavors, coloration. We believe that this tactic will help differentiate us from our rivals in the industry and win the hearts of health conscious consumers. Ours strategy will also focus on providing excellent services to our customers. The present day customers prefer eating out in bars and restaurants, where they feel valued and respected. As such, to win the hearts of Sidney City residents, Fruity-Juicy will ensure that customers are provided with excellent services. To achieve this, the restaurant will hire the best talents in the local market. We will ensure that our customers are provided with all the assistance they need and served as fast as possible. Additionally, to ensure quality service, Fruity-Juicy will be set up in a clean and friendly environment to allow customers to enjoy their fruit juices and smoothies without any form of interference. There will also be entertainment, consisting of live bands and large screens for movies and football to keep our customers entertained as they enjoy their meals. At the same time, we intend to enhance our customer service and product offering by providing a free Wi-Fi and magazines to our customers to enable them enjoy their stay in the restaurant. We also intend to attract a large number of customers by offering our fruit juices and smoothies at an affordable price. In this respect, we will charge prices that are slightly lower than those charged by our competitors without necessarily compromising the quality of our products. Based on the market research we conducted in Sidney and its environs, we have resolved that a cup of fruit juice and smoothies will be sold for just £1. This price is highly affordable to the Australian consumers who are currently having increased disposable income triggered by current economic growth and decline in unemployment. Fruity-Juicy intends to use a variety of marketing tools to reach its targeted s and increase brand awareness among Sidney city residents. The business’ first and most important marketing tactic that it intends to employ is the use of word-of-mouth and in-restaurant marketing. We find these marketing tactics useful and effective in increasing brand awareness because of the high number of customers we expect to visit the restaurant soon after opening. Some of the in-restaurant marketing tools that the restaurant intends to use include issuing customers with brochures, wall posters, outside signage, grand opening promotion and party catering. The business also intends to reach its targeted customers through the Australian local media. Website is the first media tool that Fruity-Juicy intends to use to reach its targeted customers and increase its brand awareness. The business will open up a user-friendly website, where customers from all over Australia and beyond will get the opportunity to view the products and services that we offer. Secondly, the business will also engage in aggressive social media campaign to reach its targeted audience. A research conducted recently found that about 90% of Aussies have at least a social media account. As such, Fruity-Juicy will take advantage of the wide social media usage to reach its targeted customers. Additionally, the business will also create brand awareness through TV ads, newspapers, billboards and by sponsoring major sporting events in Sidney and its environs. Operational Plans Location The restaurant will be located along the busy Oxford Street in Sidney. This location has been found suitable because it is always busy with travelers and frequented by tourists who visit the city. Additionally, there are quite a number of universities and colleges situated along and near the street. This makes the place ideal for the fruit and smoothie business as it will not only enable the business attract business people and visitors to the street, but also students and lecturers who use the street quite often. The location has also been chosen because it is easily accessible either by food or by vehicles. Further, the place has been chosen because it has ample parking bay that can accommodate at least 50 vehicles at the same time. However, the main challenge that the business will experience with regards to its choice of location is high competition since the street has been a target of most restaurants and bars, some of which offer similar menus as Fruity-Juicy. Despite the stiff competition expected in the area, the business intends to overcome competition by offering high quality products and services at affordable cost. We have already identified a prime commercial building in the area measuring 3000 by 3500 feet, which we intend to rent for a period not exceeding ten years after which we will construct our own building after the business becomes profitable. Since the building is not in good condition, we intend to carry out renovation works to make it look beautiful and appealing in the eyes of our customers. The restaurant will be fitted with neon lighting system and decorated with different colors to make it attractive. Initially, the restaurant will operate from 6 am to 10 am 24/7 with the possibility of the management increasing the number of working hours to 24 hours based on the demand and needs of customers. Supply and Inventory Management Our fruits and milk will be sourced directly from farmers. The restaurant has already identified a number of suppliers of different fruits, by avoiding relying on just a single supplier to give us a greater bargaining power in terms of pricing, as well as minimize chances of shortages that might arise in case a supplier fails to provide us with the products. The suppliers that we have identified are reputable and are willing to allow us some discounts, which will be based on the quantity of fruits and milk that we buy at any particular time. Because the products that we will be dealing with are very perishable, we intend to adopt an effective inventory management system that will involve ordering only the right quantity that customers are able to buy each day. This will not only minimize wastage, but also save the business the amount that it would spend on storage space. Production and Distribution We will adopt a simple production process in which customers will be allowed to make an order by providing the type of fruits that they want their juice. With this information, our staff will then pick the fruits chosen by the customer and blend them using a blending machine. To ensure that quality is maintained, we will ensure that no additive or sweeteners are added to the fruit juices of smoothies, unlike a customer makes a special request for addition of flavors or sweeteners. Above all, the management will ensure that customers are served in a clean and friendly environment. Regarding distribution, the fruits and smoothies will be sold in our restaurants that will be located along Oxford Street in Sidney. However, as the business continues to grow, we will expand the outlets to other major cities in Australia. Apart from selling the products in the stores, we will also have a team of staff that will distribute our products to customers at their places of work and homes upon request. All that will be needed is for a customer to order and provide the restaurant with his/her exact location, where the products will be distributed in a matter of minutes. Financials Presently, the restaurant is owned by the two family members, Mr. and Mrs. Brown who will together contribute £50,000 towards the business. Since the business require an initial capital of £100,000, the remaining £50,000 will be sourced through equity and debt financing. Out of the £50,000 remaining, the owners intend to raise £30,000 through equity financing and £20 through bank loan. Start-Up Cost Estimate Lease of Premises £30,000 Site modification and renovation £5,000 Furniture & Fitting £10,000 Business License £1,500 Food Supplies £10,000 Equipment & Equipment £10,000 Legal Fees £1,000 Electricity £500 Insurance £1,000 Stationary £500 Brochures £200 Uniforms £1000 Advertising £400 Entertainment £300 Salaries £10,000 Phone £600 Cash Reserve £13,000 Projected Profit & Loss Fruity-Juicy will make a loss in the first month of operation during which it will utilize the cash reserve to cater for costs and expenses during that month. However, the company will start making profits in the second month after breaking even.     Fruity-Juicy Restaurant       Pro-forma Income Statement             Month 1 Month 2 Month3 Revenue £ £ £ Fruit Juice 18,000 21,600 25,920 Smoothie 10,000 12,000 14,400 Total Revenue 28,000 33,600 40,320 Cost of Sales       Fruit Juice 7,000 7,350 7717.50 Smoothie 3,000 3,150 3,307.50 Total Cost of G. Sold 10,000 10,500 11,025 Gross Profit 18,000 23,100 29,295 Expenses       Salaries 2,000 2000 2000 Site modification & Renovation 5,000 00 00 Uniforms 1,000 1,100 1210 Brochures 200 210 220.50 Legal Fees 1,000 1000 1000 Supplies 10,000 11,500 13,225 Electricity 500 500 500 Phone 600 1050 1102.5 Stationary 500 550 605 Advertising 400 420 441 Entertainment 300 300 300 Business License 1,500 1500 1500 Insurance 1,000 1,000 1,000 Dep. On Mach & Equip 500 500 500 Interest Expense 500 500 500 Total Expenses 26,000 21,580 24,104 Net Income/Loss -8,000 1,520 5,191 Break Even Analysis According to our estimate, the restaurant will break even in the second month of operation from which it will start posting growth in profits. Total fixed cost £43,500 Variable costs £20500 Average price per cup £1 No. of months it takes to breakeven 2 months Projected Cash Flow     Fruity-Juicy Restaurant       Pro-forma Cash Flow             Month1 Month 2 Month3 $ $ $ Cash Sales Fruits Juice 18,000 21,600 25,920 Smoothie 10,000 12,000 14,400 Total Cash Sales 28,000 33,600 40,320 Investment Received 30,000 0 0 Total Sub Cash Received 58,000 33,600 40,320 Expenditures Cash Spending 87,000 Expenditure Sub-total 87,0000 Cash Flow (6,000) (13,200) 7,000 Cash Balance 13,000 6,000 10,200 Projected Net Present Value We estimate the net present value of the project at around £20,000 discounted at 10% cost of capital. Internal Rate of Return The internal rate of return for the project is estimated at 18%. Management and Key Personnel Fruity-Juicy is still in it idea creation stage. Therefore, because the business is still small in size, it will adopt a simple organization structure that requires the two owners to make all the decisions, as well as monitor the activities in the business. However, as the business continues to expand to other locations, the owners will appoint branch managers to assist in the running of the business. Regarding our personnel plan, the restaurant intends to start the business with one cashier, three service staff, on driver and two security officers. A cashier will be responsible for daily collections and performing book keeping work. The three service staff will be responsible for making juices and serving customers. The driver will be responsible for transporting fruits and milk from farmers, as well as distributing customer orders at their workplaces and homes. The security officers will be responsible for the maintenance of security of the restaurant both during the day and night hours. Our staff will work for between 36 and 40 hours every week. Although we intend to start will a small number of personnel, their number will be increased as the business grow. In fact, we intend to hire an accountant, human resource manager, marketing manager, R&D and administration team, purchasing manager and controller as the business grow to help enhance service delivery to customers. Reference IBIS World 2015, Juice and smoothie bars in Australia: Market research report, viewed 24 June 2015 http://www.ibisworld.com.au/industry/juice-and-smoothie-bars.html Read More